Expert Q&A

I agree with Dennis, but look at the interest rates and fees on your higher balanced loans. It could be beneficial to pay off the higher interest rates first, and the reasoning is that you may be making payments and most or all may be going to interest and very little to principle. But Dennis is right get out of debt and stay out of debt and start investing to build wealth.

Putting the math aside for a moment, yes it makes sense to pay off your loans from smallest to largest. I, and other professionals, believe that wealth building and getting out of debt is 80% behavior and 20% knowledge/math. By getting rid of small debts first you kind of subconsciously get the gratification, faster, and you start to feel like a winner who is “getting ahead” sooner. Now getting back to the math, keep in mind there are often fees involved in loans other than the interest rate. So just because you might be paying off a smaller loan with a smaller interest rate being charged against you, you still might be getting ahead faster mathematically. Google “debt snowball”.